ECONOMIC ANALYSIS AND LEGAL PRAGMATISM
Elisabeth Krecké*
June 2002
This paper attempts to underline a recent evolution in the law-and-economics
movement concerning its underlying methodological and epistemological foundations.
The question of concern is whether contemporary economic analysis of law has operated
a sort of paradigm switch from the neoclassical, rather mechanical conception of legal
decision-making (social wealth maximization) to a new form of pragmatism considering
legal decision-making as a branch of practical reasoning, hence as largely subjective,
fallible and unpredictable. The descriptive component of the efficiency theory is indeed
more and more explicitly associated with a critical component. This shift to critical
analysis, as well as the growing emphasis on the importance of experience over formal
logic in lawmaking has recently increased the affinity of a part of law-and-economics
with a vision of legal realism as it lives on in our times in movements like critical legal
studies which traditionally have stood as a major counter-argument to traditional lawand-economics. Richard Posner's recent work1 displays a particularly strong and original
pragmatist component, which at times comes close to the radical conception of
postmodern thinkers like Rorty, whose jurisprudence is generally associated with
culturally relativistic pragmatism.
Is economic analysis of law actually taking a decisive turn? Does Posner’s new way of
defining pragmatism reflect a change of perspective within the movement of which he
has been one of the most influential originators three decades ago? Or can we find a
continuity in his new understanding of law ? These questions subsequently will lead us
to explore the implications of pragmatic conceptions of legal decision-making for legal
evolution: is legal evolution inherently indeterminate, contingent and hence
unpredictable, as argued by most postmodern thinkers ? Is it then possible to envisage a
positive jurisprudence? In other words, what does legal pragmatism imply regarding the
theorization of law, and more particularly regarding the economic analysis of law?
* Université d'Aix-Marseille III.
email: Elisabeth.KRECKE@wanadoo.fr
1
In particular Posner (1993) and (1995).
1
1. The pragmatist shifts of law-and-economics
Traditionally, legal pragmatism has been associated essentially with legal realism. It has
been rooted in pragmatist philosophy2, itself resulting from heterogeneous, mostly
interdisciplinary, scientific traditions. After a short period of success, legal realism as
well as philosophical pragmatism almost entirely disappeared by the end of the second
world war, the first largely replaced by analytic philosophy, and the second absorbed
into mainstream legal thought3. In recent years, legal pragmatism finally experienced an
interesting revival with postmodern philosophies like neo-pragmatism, critical legal
studies, and a growing part of recent law-and-economics.
1.1. The pragmatism of early law-and-economics
Legal pragmatism has become a widely used term with different and sometimes
contradictory meanings. It can be argued that economic analysis of law has always
adopted a pragmatic approach, but its pragmatism has undergone important changes
over time. Law-and-economics is an intrinsically pragmatic approach, be it only in the
sense that its goal - understanding how courts work and what are their effects on
individual behavior- is in itself a realist maxim. Furthermore, the underlying logical
positivism requires a validation of theory through a confirmation by reality. The
traditional method of law-and-economics consists indeed of building a coherent and
refutable theory of legal rules, processes and institutions, which in a next step is
supposed to be confronted to the empirical world. In this perspective, only empirical
investigations can refute or confirm the hypotheses derived from the theory.
Thus, the arguments for wealth maximization advanced by the first generation of lawand-economics have essentially been pragmatic. They are built on the empirical
observation that over centuries, most common law judges have developed an intuitive
sense of economics and that legal decisions and doctrines are most adequately described
as an explicit or at least an implicit application of the principles of social wealth
maximization or social cost minimization4. Lawmaking in this approach is a matter of
calculus, management, resource allocation, optimization and improvement. Strongly
influenced by the spirit of utilitarianism, early law-and-economics has undeniably
started out as an instrumental and practical view of law, contrasting with the formalism
and conceptualism of a large part of mainstream legal scholarship.
The hostility toward the principles of justice, fairness or equity displays another strong
pragmatist feature of the initial law-and-economics movement. The purpose is to
develop a scientific and anti-dogmatic approach to law. This is why the first generation
of writers, faithful to the logic of neutrality and objectivity characterizing mainstream
microeconomics generally, refused to introduce normative and ideological
considerations into their inquiries of the legal decision-making process. The initial
2
as originated in the late 19th and early 20th centuries among others by Peirce, James, Dewey and Mead.
Posner (1993), 462.
4
For instance, Posner (1977), Kronman (1978), Landes and Posner (1981). See Rubin (1977) for the
evolutionary version of descriptive economic analysis of law.
3
2
literature, of which Posner can be considered as one of the emblematic figures, is thus in
the beginning limited essentially to descriptive analysis. It is interested in the way the
law is and how it evolves, rather than how it ought to be. According to this perspective,
ethics is considered as a subjective, rhetorical and arbitrary matter and there is no scope
for it in economics. Law-and-economics pushed the quest for objectivation even further
than traditional economists by denying any link not only between economics and ethics,
but also between law and ethics.
The reasons of this skepticism are themselves fundamentally pragmatic: first, taking into
account complex moral or ethical aspects would risk to unnecessarily encumber the
theoretical investigation into the legal process. Abstraction and reductionism are
considered as essential features for a theory to work5. Second and related argument, any
concept that cannot be quantified, formalized or objectively defined is considered as a
suspect, futile and unusable value. Justice is such a concept. Considered as an emotive,
intuitive and irrational principle, justice is discarded for being a useless device for legal
practice as well as for the scientific inquiry into the law. At the same time, as previously
mentioned, the generally advanced justification of the wealth maximization principle is
that it is an operational criterion, and therefore particularly useful for understanding the
functioning and evaluating the soundness of legal decision-making6. That this criterion
is derived from economics and not at all from the law is not a preoccupation in this
pragmatic and descriptive perspective and hence does not call for any deeper
argumentation. What is of interest is simply to see whether and how legal decisionmakers use this criterion.
It is precisely on this point that the pragmatism of early law-and-economics poses a
problem. Indeed, the serious lack of empirical verification (mainly due to informational
problems and lack of relevant data) made it difficult to support the theory according to
which in real life, legal decision-making is systematically based on the narrowly defined
efficiency criterion7. Furthermore, in many cases, legal practice happens to refute this
assumption8. The difficulties to empirically verify the descriptive thesis may explain
why the law-and-economics movement has progressively shifted from an explanatory to
a prescriptive theory. If it is not possible to prove by observation that the common law is
efficient, an alternative is to state that it ought to be efficient. Wealth maximization then
becomes a normative principle for guiding legal policy. This is how at least part of the
literature came to mask the gap that became apparent in the theory because of the failure
of empirical work to confirm it.
1.2. From pragmatism to a form of legal formalism
Like descriptive theory, the normative conception - brought forward among others again
by Posner9 - started out as a rather pragmatic approach to law. The purpose is to provide
As Posner notes, “ if a theory is too rich, it may not be falsifiable - a looming for economics... Maybe
economics is not reductionist enough ”. Posner (1993), 366.
6
Posner (1980).
7
Rizzo (1979).
8
Rizzo (1979) and (1980).
9
For instance Posner (1980).
5
3
an instrument that is supposed to improve the legal system, and what counts is whether
the instrument works, not where it is grounded. The problem with this approach is,
however, that the instrument rather soon turned out to be much less workable than it
seemed at first sight. Severe technical and philosophical deficiencies of the KaldorHicks wealth maximization criterion indeed made it appear as a largely unworkable
response to legal problems10. Among the widely underlined shortcomings, in particular
informational problems largely undermine the methodological foundations of the
efficiency theory of law11. This theory may still be labeled pragmatist in the sense that it
endeavors to refashion the law into an efficient instrument, but it is a pragmatism that
reveals itself largely impracticable.
While part of the literature came to absorb many objections and to recognize that the
attempts to make wealth maximization an instrument for creating good law have not
necessarily been altogether successful, another part operated an important, yet largely
unnoticed shift from a logic of means to a logic of ends, by progressively transforming
efficiency into a supreme value that ought to be defended for its own sake12. Wealth
maximization ceases to be instrumental and becomes foundational. In the modest
version of the theory, it becomes a moralism in competition with justice or ethics13, and
in the radical version, justice is simply considered as a label for wealth maximization14.
Efficiency no longer is viewed as a means in the service of law, but law is seen as a
means in the service of the ultimate social goal, efficiency.
This evolution is an important shift away from the pragmatist spirit that has prevailed in
the initial economic theory of law. It is a shift away from the question of whether the
advanced criterion is workable or not (which is a pragmatic concern), and a step towards
the systematic defense of social efficiency as a meta-value. While in initial economic
analysis of law, every form of moralism had been categorically rejected as a foundation
of law, wealth maximization has now become itself such a moralism. At this stage, the
theory has been constrained to explain why an extralegal (and more precisely an
economic) criterion could be supposed to be more valuable than criteria directly derived
from the law. This is definitely not an easy task and attempts to justify the imposition of
an economic value upon the law remain exceptions15.
This evolution is at the same time an important shift away from anti-formalism and anticonceptualism characterizing the beginning of law-and-economics and a step toward a
new kind of legal formalism. As admitted by Posner16 himself, economic analysis of law
has ended up replacing legal conceptualism (against which it initially has been a revolt)
with economic conceptualism. Legal outcomes are evaluated by their conformity not
with some overarching legal concepts (as it is the case in legal formalism), but with not
10
Kronman (1980).
Rizzo (1985), Krecké (1996).
12
For example Posner (1977) and Cooter (1987). For a detailed review of this literature, see Krecké
(2001).
13
Calabresi (1980).
14
Posner (1977).
15
See for instance Posner (1980).
16
Posner (1995), 2.
11
4
less highly valued principles of economics. It has become an approach that keeps away
from the world of facts just as much as does legal formalism, which may explain why
law-and-economics is sometimes titled the new Langdellism17. What could be the
antidote to this new, disguised form of conceptualism ?
2. Toward a pragmatist reconstruction of law-and-economics ?
2.1. Critique of the law
Some leading law-and-economics scholars recently came to admit the dogmatic
character that part of the approach has developed. For instance Ulen invites scholars to
« leave the cathedral and get to the microscope » - the discipline should quit acting
« like a religion and more like a science »18. Reactions within the movement are
manifold, reaching from severe self-criticism and devaluation of the efficiency
assumption19 to a rather pronounced form of nihilism, which at times comes close to the
conclusions of the radical critiques of law brought forward for instance by critical legal
studies - a movement which, with the strong emphasis on the biases that systematically
pervert the legal system, had always been considered as an anti-thesis of law-andeconomics20. In recent years, authors, who once had been fervent advocates of the lawand-economics approach, indeed brought up a strongly critical conception, which often
makes it difficult to formulate any concrete suggestions or plans of action for reforming
the legal system21.
Posner is one of the rare law-and-economics writers who undertakes to see where the
theory still stands after taking into account the sometimes destructive objections, in
particular with respect to the limited realism of the traditional, allocative explanation of
legal decision-making. His recent writings can be considered as the most representative
manifestation of an attitude which consists of turning away from the normative and
ideological considerations and instead limiting the focus of analysis exclusively to the
world of facts. Unlike the initial economic analysis of law which was preoccupied with
providing evidence of the efficiency properties inherent in the common law, Posner now
accuses the actual Anglo-American legal system of being too much looking backward
rather than forward, and of too much focusing on authority, certitude, rhetoric and
tradition and too little on consequences and on extra-legal sources of legal knowledge22.
This would imply that the current system does not resemble to what law-and-economics
once would have considered as an efficient legal system, in other words, that the
17
In reference to Langdell (Harvard Law School) who has undeniably been the most representative
incarnation of traditional American legal formalism. Posner (1993), 442.
18
Ulen (1999), 327-8.
19
For instance Rubin and Bailey (1992), Kobayashi and Lott (1993).
20
Krecké (2001).
21
The neo-traditionalism now brought forward for instance by Kronman (1993) -which is animated by the
desire to come back to the common law of the past (as incarnated by the great lawyer-statesmen of the 19th
century and their focus on virtues such as integrity, honesty, deliberation...)- may be considered as an
exception to the general refusal of most of these nihilistic authors to go beyond critique. But he is himself
aware of the illusory and utopian character of this proposal.
22
Posner (1993, 465).
5
assumption of the efficiency of the legal system cannot be maintained any more.
According to Posner, it is under the influence of the current academic view (which is all
too solemn and self-important) and in particular the way legal education is proceeding
that the law has become opaque, dogmatic, theocratic and self-confident23. As legal
theory is generally presented essentially from an internal perspective in which law is
considered exclusively from the viewpoint and with the terminology of those who
operate within the legal system (judges, lawyers...), the probability of the emergence of a
critical, external perspective is extremely low24.
The typical realist and critical legal approaches to law (like critical legal studies,
feminist jurisprudence, critical race theory, or even the just mentioned self-critical
approaches recently emerging at the margin of the law-and-economics movement) take a
similar look on the current legal institutions, but they generally stop short after
underlining the contingency and the fundamental incoherences on which the legal
system is built. They usually assess that legal theory has not much more to offer than a
radical critique of the law. The sole task of legal theory in this perspective is to
underline legal inefficiency. Unlike the critical approaches to law and their essentially
negative jurisprudence, Posner still envisages a theory of law predestined to be used as a
framework for deciding cases and enacting statutes. He has not given up the idea of a
positive jurisprudence. In other words, his analysis starts at the point where the critical
approaches usually stop.
Does his reference to pragmatism allow him to design a positive jurisprudence ?
2.2. Return to the pragmatist spirit
The identification and critical analysis of the deficiencies of the legal system is
considered as a fundamental step for the development of this new jurisprudence.
Understanding the reasons of the systematic inefficiencies of the legal system is seen as
the necessary condition for overcoming them. In this sense, The Problems of
Jurisprudence as well as Overcoming Law could both be interpreted as a pragmatic
enterprise of reconstruction of the law. In many respects, we might think indeed that
Posner’s recent work is still reflecting a rather progressive attitude which consists of
criticizing, responding to criticisms and finding ways to make things better. The logic of
action and improvement characterizing early law-and-economics is still present. So,
even though Posner now seems to refute the traditional assumption according to which
there is some sort of invisible hand process that drives the law toward efficiency, it also
23
Ibid., 465.
“Within a few months of entering law school the law student has lost the external perspective ”. Ibid,
468. This explains the severe lack of “ a spirit of inquiry, challenge, fallibilism, open-mindedness, respect
for fact, and acceptance of change ” in the way law is nowadays produced and analyzed (465). In a system
where law is presented “ as something not to be questioned, as something that has always existed and in
approximately its contemporary form ”, it is indeed not surprising that “ much of legal scholarship and
judicial analysis is unoriginal, unempirical, conventional, and unworldly, overwhelmingly verbal and
argumentative (indeed, verbose and polemical), narrowly focused on doctrinal questions, mesmerized by
the latest Supreme Court decisions, and preoccupied with minute and ephemeral distinctions -rather than
bold, scientific, and descriptive” (468).
24
6
appears at many occasions that he continues to believe that it is important (and
eventually possible) to envisage reforms that contribute to enhance the efficiency of law.
If efficiency still plays a role in Posner’s new jurisprudence, it is, however, not
comparable to the role it used to play in standard law-and-economics. Posner has
explicitly moved back from a logic of ends to a logic of means. Efficiency is obviously
no longer viewed as a legal goal to be defended at any rate, but merely as an instrument
for evaluating the soundness of legal decisions, rules or institutions. And even as an
instrument, its applicability is considered to be limited to some areas of law and to given
contexts25. While in the standard approach, literally everything turned around the
concept of efficiency and most efforts were devoted to seeking what are the most useful
and relevant criteria (utility, wealth, Pareto, Kaldor-Hicks,...), the focus has clearly
changed. Accent is placed on the instrument rather than on the goal, and concepts no
longer play the same role.
Furthermore, we might ask ourselves whether efficiency has still the same meaning in
Posner’s recent writings. Efficiency is now understood in a much broader sense than
social wealth maximization. It is defined in terms of consequences legal rules, decisions
or institutions produce in the world of facts. The examination of the impact of a legal
proposition gives credit for its soundness. The question of interest then is to find out
which legal decisions and rules produce the best consequences. These may be long and
short-run consequences, they may be systematic or individual26. What concretely
“ best ” means does not appear to be the main issue any more. Wanting to make the law
pragmatic can thus mean all kinds of things, and efficiency can have any sense : what
matters is that the criterion is workable - its specific content being quite irrelevant.
Reconsidering the ways in which economics can be helpful in the pragmatist enterprise
could in my opinion become a crucial issue in this new jurisprudence. In this respect,
Overcoming Law could be interpreted, by extension, as an attempt for overcoming the
economic analysis of law - in other words, surmounting its deficiencies, apprehending
its underlying foundations. By bringing to the fore a broader, explicitly empirical and
instrumental vision of law in which pragmatism, not efficiency, becomes a major
concern, is Posner looking for new directions of law-and-economics ? Is he aiming to
render the enterprise of law-and-economics more realistic, more practical, more useful,
by replacing the unworkable kind of pragmatism characterizing the standard approach
by a much more “ pragmatic ” vision of pragmatism in which legal decision-makers
cease to be presented as rational optimizers with highly unrealistic capacities for
observation, deliberation and analysis ?
The critical examination of the legal system and of the current jurisprudence allows
Posner to develop an approach to law which is built on a rather personal definition of
pragmatism - an approach which claims to be altogether practical, relativistic, skeptical
and sympathetic with science. Taking into account factors such as the conditions under
which they work and the criteria by which they are selected, he now describes judges as
25
26
For instance Posner (1993), 460.
Posner (1995), 400-1.
7
earthly authorities getting their knowledge from study, reflection and experience, and
drawing upon a multitude of sources -legal and non legal, objective and subjective,
formal and intuitive, conscious and tacit. For Posner, in particular in hard cases, judges
are unable to base their decisions exclusively on either science or logic. They instead
base them on a mixture of logic, common sense, history, precedent, sociology,
economics, personal knowledge (and even prejudice) and political considerations. They
have largely to draw on informal methods of reasoning, which sometimes succeed and
sometimes fail27. Unlike the initial efficiency approach, Posner’s new vision seems to
place the legal decision-maker in a context of ignorance and uncertainty. The new focus
on pragmatism could thus allow for factors such as limited rationality and human
fallibility to be taken into account. The logic of optimization (involving the selection of
the best possible course of action among perfectly known and available alternatives) has
been replaced by a logic that at times comes close to the notion of satisficing brought
forward in organization theory and evolutionary economics to design the process of
choice of the best alternative that the decision-maker is aware of and of which he
believes that it is available. While satisficing involves maximization in a reduced model,
it can be argued that it is still a form of maximization. So, if we interpret Posner’s new
vision of legal decision-making as such an imperfect, subjective and more realistic
version of optimization, we might conclude that there is a continuity with the initial lawand-economics logic, or even that Posner’s present analysis is an amendment of the
traditional economic approach to law which overestimated the informational and
computational capacities of the legal decision-makers.
Nevertheless, this conclusion could reveal itself too quick. Interpreting Posner’s new
legal reflection is definitely not as easy and unambiguous as things may seem at first
sight. While his recent writings may in a sense appear as an attempt to amend and
overcome the deficiencies of the initial approach - in other words as an enterprise of
reconstruction of the economic analysis of law, one can also find some important
postmodern insights in his present legal thinking, which cast serious doubts on the
assumption of a continuity between his former and his new approach.
3. Reconstruction or deconstruction : a new version of law-andeconomics ?
3.1. Deviations from standard economic analysis of law
Posner’s position toward postmodern legal thought seems equivocal. His pronounced
skepticism of this contemporary philosophy may be explained by the fact that
postmodernism can be considered as a complex cluster concept that embodies
components to which Posner agrees and at the same time others he categorically rejects.
Arguing that “ pragmatism is not -at least it does not have to be-postmodernism ”28,
Posner generally takes clear distances from postmodernism. He, however, at the same
time recognizes a strong affinity between his own approach and the sort of pragmatism
27
28
Posner (1993), 455.
Posner (1995), 10.
8
defended for instance by postmodern anti-foundationalism (Rorty), deconstructivist
skepticism (Fish), critical legal studies (Unger, Hurwitz), or legal neo-pragmatism
(Michelman, Minow, Radin, Sunstein and others -among which Posnet includes
himself29), granting that his disagreement with these approaches is a discord over means
rather a fundamental opposition. Among these philosophers, Rorty - one of the most
representative contemporary writers pursuing the American pragmatist tradition initiated
by James, Dewey and Peirce - explicitly considers Posner’s recent work as being fully
consistent with his particular conception of pragmatism30.
The reliance on an external perspective
Even though postmodernism does not exist as a collective movement in legal
philosophy and the various lines of thinking that generally call themselves
postmodernists are immensely diverse, disparate and often conflicting, they nevertheless
share some basic philosophical hypotheses about the appropriate goals and the
methodology of legal theory. They hold for instance that legal theory should be directed
from an external perspective. Posner’s vision is certainly consistent with this
assumption. The denial of the objectivity and the autonomy of law as a discipline is
indeed one of the major contentions of the Problems of Jurisprudence in which Posner
more explicitly than ever rejects the traditional idea according to which law can be
practiced only by professionals who are specialized and experienced in law. The
frequent criticism that economists cannot compete on the lawyers’ terrain because they
lack initiation into legal thinking31 is categorically discarded. The awareness that
important techniques of understanding and improving the legal system lie outside the
scope of traditional lawyers’ training and experience, and that it is necessary for legal
theory to draw upon extra-legal methodologies (such as economics) to understand how
the law evolves and adapts to change, how people react to legal rules and institutions, or
how to evaluate the soundness of a legal proposition, can be seen as a postmodern
feature of Posner’s recent writings.
It is true that the reliance on an external perspective, and in particular on economics, to
conduct legal theory has always been one of the major contributions of conventional
law-and-economics, and in this sense, it could be argued that Posner’s recent work is in
this respect in continuity with the initial theory. The requirement of an external
perspective has even grown to such proportions in the initial approach that law has
become closely associated with economics. Just as for critical legal studies, law is
politics, for the standard efficiency approach, law is economics. Highly confident about
the relevance and the capacities of traditional microeconomics (and in particular its
underlying theory of rational choice) in understanding and predicting the impact of legal
rules and institutions on individual behavior, traditional law-and-economics has
developed a particularly pronounced form of economic imperialism.
On this particular point, Posner’s recent writings constitute in my opinion an important
deviation from mainstream law-and-economics. Taking into account factors such as
29
Ibid., 389.
Rorty (1990).
31
Posner (1995), 369.
30
9
intuition, subjectivity, ignorance, learning and political motivations, Posner’s recent
analysis of legal decision-making does not seem to assign economics the same role than
did the traditional theory in which lawmaking was supposed to reflect a mechanical
balancing of social costs and benefits. Posner clearly has replaced the standard
assumption, according to which there is a force inherent in the common law system to
drive the law systematically toward this narrowly defined state of efficiency, by a form
of pragmatism that closely follows Holmes’ famous truism asserting that “ the life of
law has not been logic : it has been experience ”32.
An experimental vision of law
Aware of the fact that there are probably as many pragmatisms as pragmatists, Posner
explicitly takes his line from the earlier pragmatist theories of law developed by
Holmes and Cardozo to provide his own definition of the term: “ Pragmatism means
looking at things concretely, experimentally, without illusions, with full awareness of
the limitations of human reason, with a sense of the ‘localness’ of human knowledge,
the difficulty of translation between cultures, the unattainability of ‘truth’, the
consequent importance of keeping diverse paths of inquiry open, the dependence of
inquiry on culture and social institutions, and above all the insistence that social thought
and action be evaluated as instruments to valued human goals rather than as ends in
themselves ”33.
Posner now seems to share with most postmodern pragmatists an experimental
conception of law in which the legal decision-maker is supposed to create law, much
like an inventor, or an entrepreneur34, in a process of trial and error, by constantly
formulating and testing new visions for the legal system. In this perspective, legal
decision-making appears to be a matter of judgment, discernment, intuition, as well as
caution, detachment, imagination, and commonsense35. Methods of legal reasoning are
described as manifold, disparate and often inarticulate. Posner's new understanding of
legal reasoning can in many respects be compared to Rorty’s idea of the visionary
judge36 who engages in piecemeal social engineering when he feels the necessity of a
legal change. Like Rorty, he sees in the judge above all someone who has a good idea of
solving a problem, but who, at the moment he decides a case in a new way, has no
guarantee whether it is the good choice37. Only once the consequences in the world of
facts can be determined, the soundness of the decision can be evaluated. Posner’s
description of the pragmatic judge sharply contrasts with the calculation logic of the
social efficiency model of decision-making requiring the possession of (or at least the
possibility to accede to) the relevant (objectively given) information.
In Posner's new perspective, pragmatism becomes a concern on two levels - not only as
a method of legal decision-making (pragmatic adjudication), but also, as pointed out
32
Holmes (1881).
Posner (1993), 465.
34
Krecké (2002).
35
Posner (1993), 109.
36
Rorty (1990).
37
Posner (1993), 459.
33
10
previously, as a method for scientific inquiry in law (pragmatic philosophizing). Indeed,
social experimentation seems to be preferred over theory, which implies that from a
theoretical or jurisprudential standpoint, imposing on judges restrictive formulas on how
to solve legal cases has to be considered as a futile and useless enterprise. For Posner,
describing or theorizing about legal decision-making should be conducted in a
pragmatic and experimental framework - just as legal decision-making itself, precisely
because there can be no a priori workable formula to tell judges how to decide cases in
advance. The applicability of legal theory is hence very limited. Its ultimate test of
pertinence is how it works in practice. In this respect, also the question whether
economics has much to contribute to the understanding of law becomes a merely
empirical question. Posner closely joins Rorty when he argues that pragmatist legal
theory has to be prepared to defend itself on pragmatic grounds38.
Is this experimental and practical vision still consistent with mainstream law-andeconomics whose major preoccupation precisely consists in finding an adequate formula
to impose on judges in order to generate efficient decisions ? Has Posner’s description
of the pragmatist judge undermined the enterprise of the economic approach to law ?
An anti-foundational approach to law
Postmodern writers further unfold a deep distrust of any metaphysical foundations of
law such as justice, natural law, inherent human dignity, inalienable human rights,
autonomy, but also maximization of utility or creation of wealth, which explains that
their philosophy is frequently labeled anti-foundationalism. Such transcendental, first
principles of law are considered as “ grand narratives ” or “ metanarratives ”39 which do
not make any sense in our postmodern age. It is argued that any concept of justice,
however it may be defined, is always implanted within a given culture, which casts
doubts on the quest for justice itself. Concepts of justice are considered as contingent
and relative to social meanings40. Any science or theory that draws its legitimacy out of
a reference to grand narratives is rejected in this philosophy.
Asserting that “ the foundations have been kicked away ”and that “ today we are all
skeptics”41, Posner seems to adhere to the anti-foundationalist standpoint. For Posner,
law is an activity, rather than a concept or group of concepts42. At several occasions, he
underlines the failure of the traditional and (neo-traditional43) attempts to find
transcultural, ahistorical, neutral, universal and objective accounts of justice and
morality44. He openly shares with anti-foundationalists a pronounced hostility toward
38
Posner (1995), 12.
Lyotard (1984).
40
Litowitz (1997).
41
Posner (1993), 453.
42
Ibid., 459.
43
Such as Kronman (1993).
44
“ The traditional -and neotarditional, and liberal, and radical - pieties of jurisprudence should be
discarded, and the legal enterprise reconceived in pragmatic terms. Once this is done the dichotomy
between legal positivism and natural law collapses, with no loss... The attack on foundations, on
certitudes, on tradition, on Grand Theories owes much, I have emphasized throughout, to the pragmatist
tradition”. Posner (1993), 462.
39
11
the halo surrounding academic law, agreeing that the removal of overarching, first
principles should be a major task of legal theory.
It is true that initial law-and-economics had also discarded justice as a metaphysical
principle, but at the same time, as we have pointed out earlier, a representative part of
the literature has elevated the concept of social wealth maximization as a founding
principle of law. In other words, it has still been a foundationalist approach, except that
it was efficiency, not justice which had been considered as the grounding value. When
rejecting all first principles supposed to ground the law, Posner, however, seems to
include even efficiency. His new vision appears to be truly antifoundationalist.
Philosophically, he seems to have made the choice to renounce to any attempt to ground
the law. So, on this point as well, we might conclude that Posner’s new conception
comes close to postmodern legal thought and stands in contrast with the traditional
efficiency approach.
A critique of rationality
Probably the most important split between Posner's former and new approach to law
concerns the question of rationality. Indeed, rationality is the core element on which the
entire law-and-economics paradigm has been built. Traditional economic analysis of law
is basically a theory of incentives and deterrence in which the law is described as an
instrument to act upon individual behavior in order to achieve a state of optimal
resource allocation. The ultimate goal of the law, in this perspective, is to guide people’s
choices into a certain direction, to get them act more reasonably and efficiently, in other
words, to rationalize or regulate their behavior. The aim of the economic approach is to
assist the legal policy maker in this task, by forming predictions about the effects of law
on individual behavior as well as judgments about what the law ought to be doing45.
As a theory of deterrence, law-and-economics needed a theory which helped it to predict
how those who are supposed to be influenced are likely to behave. Economics offered
such a theoretical outlook at human behavior : rational choice theory. The rational
choice theory on which traditional micro-economics is relying describes human
behavior as rational in the sense that it is motivated by an expected pay-off, that it is
based on a calculus of advantage, that it is responsive to incentives and instrumental to
the interests of the actor. More specifically, it ascribes to humans the capability of
rationally adapting, in a case-by-case fashion, to the particularities of every specific
choice situation. Faithful to Becker, law-and-economics advocates see little or no limit
to the scope of the applicability of the economic approach. To them, it is applicable to
all kinds of human choices, whatever their motivation (economic, political , legal,
moral, etc.). People are assumed to be naturally egoistic and therefore always acting in
their personal interest, whatever the situation.
As a consequence, the analysis of law considered as a subset of the theory of rational
choice is one of the distinctive characteristics of traditional law-and-economics. The
45
For instance in the field of tort liability, this perspective advocates the adoption of legal rules that create
incentives for individuals to take an adequate amount of precautions in order to avoid accidents.
12
basic assumptions of the neoclassical model, in particular concerning the knowledge of
the decision-maker, have been imported into numerous fields of legal analysis. Legal
actors (individuals or institutions) are supposed to maximize stable, well-known and
clearly defined economic objectives, in other words, they are assimilated to perfectly
informed and rational economic actors. Philosophically, this rational approach to law is
profoundly impregnated by the kantian vision of the individual as an embodiment of
rationality. Rational nature is considered as an end in itself, and reason as a universal,
neutral and objective faculty held by all humans which could be used to articulate a set
of rational, true beliefs -and hence, to generate first principles of law (such as efficiency
for instance). From this assumption, law-and-economics concluded that it is possible to
rationally reconstruct legal rules around the principle of social wealth maximization.
Posner once has been the most representative incarnation of this approach according to
which legal rules can simply be deduced from rationality. This, however, no longer
seems to be the case when he asserts that the real antithesis to pragmatism is
rationalism46. His recent work is impregnated with a deep skepticism about the
traditional economic claims for the use of reason as a way of solving problems. Posner
claims that important changes in law often result from a non-rational process47. On this
point, an interesting parallel with postmodern legal thought becomes apparent. In the
way Posner now describes practical reasoning, reason appears to be a social
construction, shaped by existing practices, discourses, traditions, prejudices, largely
biased or slanted in favor of existing power relations, rather than the expression of an
objectively given human nature. Just as in postmodern philosophy, the individual
decision-maker is seen as a network of beliefs, emotions, goals, which are not grounded
in anything deeper.
Does this imply a refutation of theories which assert that man is rational in the
neoclassical sense? Does Posner’s new version of pragmatism contradict theoretical
constructions such as the rational chooser in an efficient market, and as a consequence,
an approach to law which claims to be based upon such a principle of rationality? If this
was the case, the rupture with traditional law-and-economics, and with economics in
general, would be immense.
It is, however, difficult to draw from Posner’s recent writings the conclusion that the
rationality assumption has really been dropped, in particular because at some occasions,
he refers to some vague or broad conception of rationality. He asserts for instance that
“ the individual imagined by economics is not committed to any narrow, selfish goal
such as pecuniary wealth maximization. Nothing in economics prescribes an
individual’s goals. But whatever his goal or goals, some or for that matter all of which
may be altruistic, he is assumed to pursue them in forward-looking fashion by
comparing the opportunities open to him at the moment when he must chose. Realistic
about means as well as ends, economics does not depend on the idea that human beings
are effortless and infallible calculators”48. If there still is an idea of rationality here, it
would, nevertheless, not be an exaggeration to argue that it has been considerably
46
In particular the kind of rationalism characterizing legal formalism. Posner (1995), 10.
Posner (1993), 495.
48
Posner (1995), 16.
47
13
loosened : we are far from the narrow rational choice theory underlying traditional
economics.
A non teleological approach to law
Another interesting feature of Posner’s new understanding of law which reveals a
postmodern form of thinking is his rejection of one of the distinctive claims of standard
law-and-economics according to which legal evolution has an end point (a telos), and
that there exists a sort of invisible hand process within the legal system which brings us
closer to this point. The economic approach is built on the assumption that there is an
objectively recognizable tendency of law to evolve toward efficiency49, in other words,
that there is systematic progress in law. Posner no longer seems to share this faith in an
inner logic of legal evolution toward a better society (however “ better ” may be
defined). Insisting on the contingency of legal doctrines and the diversity of the
judiciary, and describing legal decision-making as subjective, intuitive, creative and to
some extent politically biased, Posner cannot escape refuting claims of systematic and
inherent legal progress. Here again, he seems to challenge a core assumption of
traditional law-and-economics.
More importantly, Posner cannot escape considering the outcome of legal evolution as
largely unpredictable and, at least to a certain extent, contingent and indeterminate. This
typically postmodern vision of the legal process would have important implications in
terms of the definition of law. How, indeed, could law be defined, once the contingency
and subjective nature of legal decisions become apparent and the metaphysical and
epistemological foundations have been removed from our way of thinking the law?
What does law look like if we are merely in a logic of means and have given up any
quest for sense ? Taking into account the reality of the legal process (contingent,
subjective, experimental and fragmental character, absence of foundations, systematic
shortcomings) renders extremely difficult the mere enterprise of envisaging a positive
jurisprudence. Do these features forestall the possibility of any systematic
comprehension of law ? Do they necessarily lead to a nihilism which precludes any
possibility of understanding and reforming the law?
Posner seems to be aware of this difficulty. Anticipating the comments of the readers of
the “ pragmatist manifesto ” developed in The Problems of Jurisprudence, he ironically
asks himself whether he is announcing the “ death of law ”50. Is Posner attempting to
"de-define" the law - hence joining one of the postmodernist themes par excellence? The
question which appears inexorably is whether the title of the following book,
Overcoming Law, could not be considered as a step toward a "deconstruction" of law.
The expression « overcoming law » can indeed be interpreted in two radically opposed
ways : either, as previously suggested, as a way to amend law (reconstruction after
critical evaluation), or as a way to destroy its foundations (deconstruction).
49
50
Rubin (1977).
Posner (1993), 461.
14
Of course, Posner does not argue for a deconstruction of legal discourse and the
institutions of law as explicitly and radically as do for instance Rorty51 and Fish52. As a
consequence, it is not possible to evaluate whether Posner's new legal theory is really
deconstructivist (and if yes, how radically it is). Nevertheless, it is undeniable that his
recent work is profoundly impregnated with these authors' emphasis on the
epistemological impossibility to ground judgments in law. If we consider that Posner
has really announced the death of law, we cannot escape concluding that he has by the
same token announced the death of law-and-economics. Is pragmatism a dead-end for
the enterprise of law-and-economics and for legal theory in general? Can there be an
alternative to deconstruction, in other words a positive jurisprudence, once metaphysics
and in particular the discourse of the founding rationality have been discarded from
legal thinking?
3.2. Is the new pragmatism compatible with economic analysis of law ?
As previously mentioned, many pragmatist movements grow out of a form of antiintellectualism, which beyond faultfinding inquiry cannot offer any positive
jurisprudence. The radical skepticism of critical legal studies concluding that law can
impossibly be more than politics, cannot really lead to much constructive theory.
Similarly, neopragmatism argues in favor of social experimentation as the only possible
way of reforming the legal system. The title of Lubet’s paper53 “ is legal theory good for
anything ? ”, and the answer given, “ no, it is useless ”, perfectly reflects this attitude. A
pragmatist approach thus easily leads to anti-theory or even anti-philosophy. In Rorty's
pragmatic perspective, for instance, judges' visionary decisions seem to systematically
take place in a context of complete ignorance of whether the decisions will turn out to
be right or not. Judges' decisions are mere "leaps in the dark". As a consequence, legal
theory can at best comment and document these erratic social experiments, insisting on
the complex interrelations of legal, economic, social, political, cultural and
psychological factors. No systematization of law is ever possible in such a perspective.
What could be the use of such a negativistic and anti-theoretical approach for law-andeconomics? Would there still be scope for the use of economic methodology to
understand the law? Does the reliance on pragmatism inevitably undermine the idea of
an economic analysis of law? Posner admits himself that legal pragmatism is
destructive, but he adds that it is "helpfully destructive"54. What could this mean with
respect to the purpose of law-and-economics ?
Posner recognizes the major weaknesses of pragmatist social thought, conceding that the
pragmatist philosopher undercuts his own activity, that of philosophizing55. He is aware
of the fact that an approach to law as the one developed in The Problems of
51
For instance Rorty (1990).
For instance Fish (1989).
53
Lubet (1997).
54
Posner (1991) « Pragmatism vs. the Rule of Law », Presentation at an American Enterprise Institute,
quoted by Machan (1995), 2.
55
Posner (1995), 8.
52
15
Jurisprudence and Overcoming Law may have a damaging impact on jurisprudence, and
even on a certain conception of economics. But he immediately adds that his new
approach is not damaging for the enterprise of law-and-economics : « ...not because it is
my enterprise, but because it epitomizes the operation in law of the ethic of scientific
inquiry, pragmatically understood. Far form being reductionist, as its detractors believe,
economics is the instrumental science par excellence. Its project is not to reduce human
behavior to some biological propensity, some faculty of reason, let alone to prove that
deep within us, pulling the strings, is a nasty little ‘economic man’. It is to construct and
test models of human behavior for the purpose of predicting and (where appropriate)
controlling that behavior. Economics imagines the individual not as ‘economic man’,
but as - a pragmatist »56.
Reconsidering the possibilities and the limits of economics in general, and its
application to law in particular, and at the same time, the importance of other
approaches such as the psychology of law, sociology of law, legal anthropology or
jurisprudence as a positive theory of law, becomes crucial. Insisting on the
complementarity of different interdisciplinary approaches dealing with legal issues,
Posner’s new vision seems to be more radical and at the same time more modest and
open-minded than the initial efficiency theory. His proposition to integrate the economic
approach of law into a broader theory, which is not necessarily an economic theory57,
seriously weakens the economic imperialism typical for the standard economic analysis
of law.
But are we still in economics? In particular, with the loosened (or dropped ?) rationality
hypothesis, have we given up the economic standpoint ? Posner makes an interesting
tour de force, arguing that there can be economics without the (strong) rationality
assumption, while there can be theories of rational choice that are not economic, and
that therefore, one cannot call economics the science of rational choice58. He further
admits that his pragmatist approach is not necessariliy an exclusively economic one. He
does not believe any more that the economist holds all the keys to legal theory, but
rather one key among others59. Posner seems to have rejected the idea of a complete,
unique and closed explanatory system as the one brought forward by traditional lawand-economics. Law-and-economics is no longer considered as the Grand Theory with a
synthetic and recapitulating ambition (such as explaining the common law). At best, its
focus can be on fragments, and piecemeal social engineering, and experimentation is
brought forward as its new method.
What Posner undeniably has gained from his pragmatist (and to some extent
destructive) revision of the goals of legal theory (and as such of economic analysis of
law) is a new and genuine openness to debate. In particular, the new pragmatism,
beyond important aspects such as limited rationality, human fallibility (including the
possibility that legal actors may be influenced by their personal prejudices or political
considerations), allows for factors such as intuitive judgment, alertness and creativity.
56
Ibid., 14-15.
Posner (1993), 374.
58
Ibid., 368.
59
Ibid., viii.
57
16
Human action - and in particular decision makers' capacity of learning from experience seems to be placed in the center of Posner's new theoretical reflection on the process of
law creation. There is at last scope for genuine judgment and decision-making in the
analysis of the legal process.
This is where economics comes in again, not in the narrow optimization perspective, but
more broadly, as the science of human judgment and choice.
Conclusion
The starting point of the present reflection has been the following question. Can we
speak of a revolution in law-and-economics (in the sense of a radical change of the basic
foundations) or does Posner’s recent evolution towards a new form of pragmatism
merely reflect a slight shift, a simple derivation of the original economic analysis of law,
keeping the basic foundations of the theory unaltered ? I have argued that while Posner’s
recent emphasis on pragmatism can be interpreted in part as a continuity with the initial
economic approach to law (and in this sense as an effort to rescue the enterprise of lawand-economics by amending its underlying methodological foundations), there are also
symptoms announcing a genuine split with the initial theory, entailing an alteration (or
to use postmodern terminology, a deconstruction) of its basic foundations, in particular
with respect to the rationality assumption.
This presumption has lead me to consider the question whether an economic approach
to law is still possible once the deconstruction of law is envisaged. The mere possibility
of a positive jurisprudence indeed seems to be seriously compromised in postmodern
thinking. Therefore Posner’s sympathy for approaches that initially stood as antitheses
to law-and-economics, such as legal realism, critical legal studies or neo-pragmatism,
has important implications for what still is (or what can be) the scope and specificity of
law-and-economics.
My opinion is that the pragmatist shift operated by Posner, far from destroying the
enterprise of law-and-economics, is a much more appropriate and realistic way of
understanding the evolution of law than was the mechanical social efficiency model. In
particular, the emphasis on the process of legal learning (heterogeneity and multitude of
sources of learning - legal and extralegal) could become a way to reintroduce an
economic understanding in a pragmatic legal reflection, avoiding both the antiintellectualism of most of postmodern legal pragmatisms (generally precluding the
emergence of any positive jurisprudence) and the unrealistic mechanical formalism of
the social wealth maximization model. In Posner’s new pragmatist vision, there is scope
for innovations and improvements. Learning indeed implies correcting errors, revising
decisions and routines, adjusting them to new circumstances. It also involves the
diffusion of knowledge and transmission of experiences. In this sense we can find a
consideration of efficiency of the legal process, of course in very different terms than the
initial, narrowly and statically defined social wealth maximization concept. In my view,
the actual pragmatist trend in law-and-economics has not rejected the use of economic
tools to study legal phenomena. It simply shows that the faith in what economics can do
is no longer the same.
17
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